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     BEIJING (MNI) - The following are highlights from the China press for
Wednesday, Dec. 27: 
     China's financial regulation will focus on three risks: the debt of
state-owned enterprises (SOEs), local government debt and the wealth management
sector, the Economic Information Daily said in a front-page commentary on
Wednesday. As an effective method for deleveraging the SOEs, debt-to-equity
swaps will grow rapidly next year. A slower increase of local government debt
will constrain infrastructure investment, which in turn will drag down demand
for raw materials. Under stricter regulation, the scale of wealth management
products will shrink noticeably. However, regulators have reiterated that they
will pace their efforts to maintain stability, the commentary said. (Economic
Information Daily)
     The deterioration in corporate bond issuance in China has sharply increased
this year in a market made sluggish by strict regulation and tight liquidity
conditions, the Shanghai Securities News reported Wednesday. As of the end of
November, 734 corporate bond issues had failed or were canceled, affecting
CNY586.63 billion worth of bonds, compared with CNY577.53 billion for all of
last year. In November alone, CNY85.23 billion worth of bonds were canceled or
postponed, 2.6 times more than in the same period last year. Issuers and buyers
of corporate bonds are both reluctant to do business, with a capital shortage
pushing up bond rates. The situation is expected to continue next year as
liquidity conditions tighten further. (Shanghai Securities News)
     Rates for negotiable certificates of deposit (NCDs) have surged to a record
high this week, the China Securities Journal reported Wednesday. Banks have been
under pressure from year-end liquidity assessments, and a large amount of NCDs,
used in the interbank market, are maturing. On Tuesday, the range of rates for
one-month NCDs issued by AAA-ranked joint-stock banks rose to a historic high to
5.2% to 5.5%; for three-month NCDs, the rate range was 5% to 5.3%. A total of
CNY2.2 trillion worth of NCDs mature in December, which means banks need to roll
over the instruments to meet liquidity coverage ratio requirements. An
unexpectedly fast increase in NCD rates began in the middle of September even
though regulators had discouraged the rapid expansion of interbank transactions.
(China Securities Journal)
     Chinese real estate companies, under pressure from strict regulation, are
intensively selling off assets to get recoup capital and strip away poorly
performing holdings, the Shanghai Securities News reported Wednesday. Property
market controls are deepening, causing transaction volume to drop, and fund
raising for real estate companies has been tightly restricted, so developers are
scrambling to cut debt. In November, 11 real estate companies, including 9 that
are state-owned, sold a total of CNY56 billion in assets. The assets were mainly
out of line with the companies' strategies or were in remote or lower-tier
cities. (Shanghai Securities News)
--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com
--MNI Beijing Bureau; +86 (10) 8532-5998; email: rich.dirks@marketnews.com
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